 "Sebi might conduct forensic audit of Ricoh India accounts")
In addition, the BSE is likely to suspend trading in the company's shares with effect from May 26, on account of non-compliance under Sebi listing norms.
The move came after PwC, appointed by the company’s Audit committee for forensic view of accounts, indicated ‘wrong doing’ and an unsupported transaction in the book of account of the company. Besides, the firm has also failed to submit its limited review reports to the regulator for two consecutive quarters - September and December 2015. It reported its September 2015 quarter results on May 19 after much delay.
“The same mechanism can be used to ascertain any instances of inconsistencies in product pricing and to check the back-dated transaction in the books of accounts, if any," he added.
In an email response, Ricoh India spokesperson said: “We have not been contacted by any government body so far regarding the issue. The company has been making regular disclosures to the BSE regarding the present situation and will continue to maintain this transparency in the future as well. Based on the independent agency review and auditors limited review report, the company is conducting internal investigation presently and will be able to share further details post completion of the investigation.”
On the suspension of trading, Ricoh India said, “Securing the interest of shareholders is a priority for us and we are considering every possible recourse available to us to avoid suspension of trading. Despite ongoing investigations and challenges posed by the current situation, we have been successful in submitting the financial results for the quarter ended September 30, 2015. We are working on priority towards preparation of pending financial statements for December 2015 to table them to the Board and have requested the BSE to give us an extension to submit the same.”
A query to Sebi did not elicit any response.
On March 18, the BSE in its notice said Ricoh India along with other four listed firms would be shifted to the 'Z' group with effect from March 28 due to non-compliance with listing norms for two consecutive quarters. This led the stocks plunge from Rs 569 on March 18 to Rs 256 as on date - a fall of 55 per cent.
Soon after the BSE notice amid an ongoing audit by a committee including an independent law firm and accountants, the company asked its top executives including managing director Manoj Kumar, chief financial officer Arvind Singhal, and Anil Saini, its chief operating officer, to go on leave.
“The market regulator should supersede the current board of Ricoh India and appoint at least two new directors on board,” said Anil Singhvi, founder director IIAS and chairman of Ican Investments Advisors.
“The total borrowing in March 2014 stood at Rs 367 crore. Now it is Rs 1,300 crore. Ricoh, which is a trading company, does not manufacture a single rupee worth of goods. How, then, did its loan amount reach Rs 1,300 crore? It simply means that the revenues and receivables are padded up," added Singhvi.
The frequent replacement of auditors has also raised a lot of doubt. The company’s board appointed BSR & Co as its new statutory auditors for five years in place of retiring auditors Sahni Natarajan and Bahl in July 2015. Later on, the Amarchand Mangaldas & Co and PwC had been appointed for auditing.
Meanwhile, S S Kothari Mehta & Co also conducted an enquiry, but its findings were not agreed upon with BSR.
Subsequently, the company board promoted A D Rajan as the new managing director and chief executive.